Why is butter considered a "military" good, and what effect does this have?

If you switch to your "civilian" outfit while in a store, it will highlight all non-civilian equipment (such as (most) armour and weapons) in purple.

Grain, meat, grapes etc. count as civilian items, but not butter. Why is this, and does it have any effect on gameplay?

As far as we now the only current gameplay effect of civilian items is that those are allowed to be worn in town.

As trade goods can't be worn it would seem there are no effect there. Although there may be some effect on economy or one is planned in the future. Something along the lines of different tax on civilian/military goods or garrisons favoring military food more than the general population.

But for now we don't know if there's any affect.

As to why it is it's hard to say for certain, but considering it happens to be butter it seem likely it's a reference to the "butterlord" meme. A description of the origin of it can be found here.

It may also be a random mistake, or intentional for other reasons. We simply don't know.